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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (53347)	9/28/2001 8:53:08 AM
From: Sun Tzu	Respond to of 70976

Friday September 28, 7:58 am Eastern Time Sony Cuts Outlook on Sharp Slowdown By Reed Stevenson and Daisuke Wakabayashi TOKYO (Reuters) - Japan's Sony Corp, the world's biggest maker of audio-visual equipment, said on Friday that slumping U.S. sales and restructuring charges would push its net profit for this business year well below initial expectations. The consumer electronics giant said consolidated operating income for the financial year to next March was now expected to be 120 billion yen ($1 billion) instead of the 250 billion projected in a previous revision in July. ``Although we saw signs of a downturn, our decision to restructure and our execution came six months too late,'' Sony Chairman Nobuyuki Idei, who is also chief executive, told reporters at a news conference. Although the new outlook came after the close of trade in Tokyo, it sparked an immediate reaction in London trade, where Sony shares were changing hands at 4,135 yen, down 255 yen or 5.8 percent from Friday's close in Tokyo of 4,390 yen. Facing a weaker performance at its electronics division, which will post a single-digit percentage sales decline for the year, Sony said it would speed up plans to shed workers through voluntary retirement. As a result of a 50 billion yen restructuring charge, Teruhisa Tokunaka, Sony's chief financial officer, said cash flow for the year would turn negative instead of positive. ``The current situation has turned much more severe,'' he said. Japan's electronics companies have issued a slew of downward revisions to earnings forecasts in recent weeks as the info-tech slump drags on longer than expected. The outlook was further clouded by the air attacks on U.S. landmarks earlier this month. Idei said that any potential financial impact from the attacks was built into the new forecasts, but declined to specify what area of Sony's businesses would be hit. Further details on restructuring measures and the effect of the attacks will be provided at the mid-term earnings results announcement on October 25, he said. Masayuki Yonezawa, analyst at BNP Paribas, said Sony's group operating profit forecast was much lower than analysts' projections of 180-200 billion yen. ``This goes to show that the company is expecting very tough times in the Christmas holiday season,'' he said. JOB MEASURES MOVED UP Sony said it would set aside 20 billion yen out of the restructuring charges to bring forward a large part of a voluntary retirement program expected to reduce Sony's global workforce by 10 percent by March 2004. In the current business year, that would mean job reductions of 2.8 percent, or 5,000 employees, in North America, Europe and Japan. No geographical breakdown was announced by President Kunitake Ando, who is also chief operating officer, but he said that a ``large part'' of the job cuts would come in Japan. With Japan's jobless rate on the rise, the job cut garnered little attention when it was first announced in July. Data released on Friday showed unemployment stuck at a record high of five percent. Sony's job reductions pale in comparison to the heavy job cuts exceeding 10,000 employees from other electronics conglomerates such as Toshiba Corp, Fujitsu Co Ltd. and Hitachi Corp ``As a company, we have an obligation to maintain employment for employees, but we also have a responsibility to keep abreast with the changes in society and the market,'' Idei said. On a net basis, the profit outlook was slashed to 10 billion yen from 90 billion. This is also down 40 percent from the actual profit the previous year. Despite efforts to cut costs, the company reiterated that it had no plans to cut capital expenditures from current levels, although it would aim to cut annual materials costs by more than 15 percent in the year ending in March from the previous year. The company also indicated that its lower 2001/02 sales outlook, which was revised to 7.5 trillion yen from 7.7 trillion yen, would also take a hit from a stronger yen, which cuts into earnings brought back home to Japan. Sony's currency outlook for the second half of the business year is for the dollar to trade at 115 yen instead of 120 yen. For the euro the new outlook is 105 yen instead of 100.